By Pete Schroeder
WASHINGTON (Reuters) – Sarah Bloom Raskin, President Joe Biden’s pick to lead the Federal Reserve’s regulatory work, will tell lawmakers she believes banks need strict oversight, but that it is not her job to tell them where to lend.
Raskin will make the case on Thursday for her confirmation as the next Fed vice chair for supervision, a post that oversees the central bank’s regulatory agenda, before the U.S. Senate Banking Committee. She will testify alongside Lisa Cook and Philip Jefferson, two of Biden’s nominees to join the Fed as governors.
Raskin, a former Fed governor and senior Treasury Department official under President Barack Obama, will take on a sweeping agenda at the Fed if confirmed, with Democrats eager to reestablish tougher rules across the financial sector.
While progressives were pleased with Raskin’s nomination, she will also need to ensure the support of moderate Democrats in order to be confirmed in the narrowly divided U.S. Senate.
In her testimony, Raskin vowed to be an attentive, comprehensive bank watchdog, tracking everything from internal bank risks to cyberattacks.
“Bank supervisors must make sure that the safety of banks and the resilience of our financial system are never compromised in favor of short-term political agendas or special interest groups,” she said in her prepared testimony. “They must stay attentive to risks no matter where they come from.”
Raskin also addressed a concern aired by some Republicans and business groups that she would take a hard line against oil and gas companies as the Fed builds out tools to assess financial risks stemming from climate change.
While Raskin has urged regulators to use their tools available to mitigate climate change that did not include lending prescriptions, she said in her prepared remarks. She promised to consult broadly on all matters, including with banks themselves, when it comes to managing risks.
“The role does not involve directing banks to make loans only to specific sectors, or to avoid making loans to particular sectors,” her testimony stated.
Senator Pat Toomey, the top Republican on the banking panel, has called Raskin an “unacceptable” pick, citing her “hostility” towards oil and gas companies.
The U.S. Chamber of Commerce, the nation’s top business lobby, took the rare step of raising concerns about her climate change stances in a letter sent to lawmakers ahead of the hearing.
Raskin’s backers are quick to point out the Harvard-trained lawyer’s lengthy experience on regulations, including stints at the Fed and Treasury in the wake of the financial crisis, as well as her time as the state of Maryland’s chief financial regulator.
And the Fed is already laying the groundwork to gauge the risks climate change poses to the financial system, building out internal teams to assess that risk and also pressing banks for details on how they are mitigating climate change-related risks to their balance sheets.
(Reporting by Pete Schroeder; Editing by Lincoln Feast.)
